Correlation Between Nova Royalty and Trilogy Metals

Can any of the company-specific risk be diversified away by investing in both Nova Royalty and Trilogy Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nova Royalty and Trilogy Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Royalty Corp and Trilogy Metals, you can compare the effects of market volatilities on Nova Royalty and Trilogy Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nova Royalty with a short position of Trilogy Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Royalty and Trilogy Metals.

Diversification Opportunities for Nova Royalty and Trilogy Metals

0.67

Correlation Coefficient

Nova Royalty  Trilogy Metals

Poor diversification

The 3 months correlation between Nova and Trilogy is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nova Royalty Corp and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals and Nova Royalty is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nova Royalty Corp are associated (or correlated) with Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of Nova Royalty i.e., Nova Royalty and Trilogy Metals go up and down completely randomly.

Pair Corralation between Nova Royalty and Trilogy Metals

If you would invest  103.00  in Trilogy Metals on October 10, 2024 and sell it today you would earn a total of  10.00  from holding Trilogy Metals or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Nova Royalty Corp  vs.  Trilogy Metals

Nova Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nova Royalty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Trilogy Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nova Royalty and Trilogy Metals

The main advantage of trading using opposite Nova Royalty and Trilogy Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Royalty position performs unexpectedly, Trilogy Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trilogy Metals will offset losses from the drop in Trilogy Metals' long position.

The idea behind Nova Royalty Corp and Trilogy Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.